The Firm in the Capital Markets
- 1.5 credits
- Prerequisite: MBA Core
This course provides a rigorous introduction to corporate valuation in global competitive markets. The organizing principle of value-based management is used to provide answers to such questions as: What is the most appropriate notion of value and how is it measured? How do we use finance to fashion and evaluate corporate strategies and determine whether they create or destroy value? How are different valuation models related to each other? Students will also develop a proficiency in the technology necessary to implement this knowledge in a real-world setting. The objective is to provide students with cutting-edge valuation tools that are firmly rooted in sound concepts.The course is structured into four modules to implement the design principles discussed above:
- Module 1: Valuation and Corporate Strategy (Value creation principles, key value drivers, entry barriers, competitive advantage and valuation implications.)
- Module 2: Valuation in Practice (Value metrics: TSR, EVA, CFROI, embedded expectations of value creation, project appraisal, base case and incremental cash flows, cannibalization, project risk, using and interpreting simulation results, deciphering financial statements, proforma models and FCF projections, discussion and overview of valuation methods.)
- Module 3: Valuation Framework (Capital structure and value, modeling optimal capital structure, estimating marginal tax rates, equivalence of APV, WACC, flows to equity, divisional cost of capital, ownership and leverage.
Course Materials: Copeland, Koller, and Murrin, Valuation: Measuring and Managing the Value of Companies, 3rd edition, (Wiley 2000).Based on projects, cases, and a written exam.
Kelley finance MBA students manage a live $400,000 portfolio through the Investment Management Academy.